Direct Digital Holdings Files 8-K with Key Updates

TL;DR

DDHI filed an 8-K on 10/18/24 - material agreement, delisting notice, equity sales, and Reg FD.

AI Summary

Direct Digital Holdings, Inc. filed an 8-K on October 18, 2024, reporting a material definitive agreement, a notice of delisting or failure to meet listing standards, unregistered sales of equity securities, and Regulation FD disclosures. The company is incorporated in Delaware and headquartered in Houston, Texas.

Why It Matters

This filing indicates significant corporate events, including potential delisting concerns and unregistered equity sales, which could impact the company's stock and operations.

Risk Assessment

Risk Level: medium — The notice of delisting or failure to satisfy listing rules presents a significant risk to the company's continued trading on an exchange.

Key Players & Entities

• Direct Digital Holdings, Inc. (company) — Registrant
• October 18, 2024 (date) — Date of earliest event reported
• Delaware (jurisdiction) — State of incorporation
• Houston, Texas (location) — Principal executive offices

FAQ

Key Financial Figures

• $0.001 — tered Class A common stock, par value $0.001 per share DRCT The Nasdaq Stock Mar
• $20 million — , subject to certain limitations, up to $20 million (the " Total Commitment ") of the Compa
• $15,000 — ny paid New Circle a structuring fee of $15,000 and a legal fee of $15,000. In addition
• $150,000 — he Company will pay a commitment fee of $150,000 to New Circle, which we may issue in th
• $2.5 million — intain stockholders' equity of at least $2.5 million (the " Stockholders' Equity Requirement
• $8.77 million — 024 reported a stockholders' deficit of $8.77 million. The Letter further noted that as of th
• $35 m — a market value of listed securities of $35 million, or net income from continued ope
• $500,000 — net income from continued operations of $500,000 in the most recently completed fiscal y

Filing Documents

• tm2426512d1_8k.htm (8-K) — 57KB
• tm2426512d1_ex10-1.htm (EX-10.1) — 220KB
• tm2426512d1_ex10-2.htm (EX-10.2) — 74KB
• tm2426512d1_ex99-1.htm (EX-99.1) — 17KB
• tm2426512d1_ex99-1img001.jpg (GRAPHIC) — 6KB
• 0001104659-24-110093.txt ( ) — 635KB
• drct-20241018.xsd (EX-101.SCH) — 3KB
• drct-20241018_lab.xml (EX-101.LAB) — 33KB
• drct-20241018_pre.xml (EX-101.PRE) — 22KB
• tm2426512d1_8k_htm.xml (XML) — 4KB

01 Entry into a Material Definitive

Item 1.01 Entry into a Material Definitive Agreement. On October 18, 2024, Direct Digital Holdings, Inc., a Delaware Corporation (the " Company "), entered into a Share Purchase Agreement (the " Purchase Agreement ") and a Registration Rights Agreement (the " Registration Rights Agreement ") with New Circle Principal Investments LLC, a Delaware limited liability company (" New Circle "), pursuant to which New Circle has committed to purchase, subject to certain limitations, up to $20 million (the " Total Commitment ") of the Company's Class A common stock, par value $0.001 per share (the " Class A Common Stock "). Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to direct New Circle to purchase up to the Total Commitment of our Class A Common Stock. Such sales of Class A Common Stock by the Company, if any, will be subject to certain limitations, and may occur from time-to-time in the Company's sole discretion for a period of 36 months, commencing once certain conditions are satisfied, including the filing of a resale registration statement (the " Registration to be sold to New Circle under the Purchase Agreement, and the effectiveness of the Registration Statement. New Circle is obligated to purchase shares of Class A Common Stock as the Company directs, subject to certain conditions and limitations. Upon the Company's submission of a purchase notice, shares will be issued from the Company to New Circle, and New Circle will pay a price per share calculated based on a discount to recent trading prices of the Class A Common Stock. The purchase price per share for each purchase will be, at our election: 96% of the volume weighted average price per share of our Class A Common Stock during the period commencing (i) if the Company submits the purchase notice prior to 9:00 a.m. East

01 Notice

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. On October 18, 2024, the Company received a deficiency letter (the " Letter ") from the Listing Qualifications Department (the " Staff ") of The Nasdaq Stock Market LLC notifying the Company that it was not in compliance with the minimum stockholders' equity requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1). Nasdaq Listing Rule 5550(b)(1) requires companies listed on The Nasdaq Capital Market to maintain stockholders' equity of at least $2.5 million (the " Stockholders' Equity Requirement "). The Company's Quarterly Report on Form 10-Q for the period ended June 30, 2024 reported a stockholders' deficit of $8.77 million. The Letter further noted that as of the letter date, the Company did not have a market value of listed securities of $35 million, or net income from continued operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years, which are the alternative quantitative standards to the Stockholders' Equity Requirement for continued listing on The Nasdaq Capital Market. In accordance with the Nasdaq Listing Rules, the Company was provided 45 calendar days, or until December 2, 2024, to submit a plan to regain compliance (the " Compliance Plan "). If the Compliance Plan is acceptable to the Staff, the Staff may grant an extension of up to 180 calendar days from the date of the Letter. If the Staff does not accept the Compliance Plan, the Staff will provide written notification to the Company that the Compliance Plan has been rejected. At that time, the Company may appeal the Staff's determination to a Nasdaq Hearings Panel. The Company intends to submit a Compliance Plan on or before December 2, 2024. Further, the Company intends to take all reasonable measures available to regain compliance under the Nasdaq Listing Rules and remai

02 Unregistered Sales of Equity Securities

Item 3.02 Unregistered Sales of Equity Securities. The information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02. In the Purchase Agreement, New Circle represented to the Company, among other things, that it is an "accredited investor" (as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the " Securities Act ")). The securities referred to in this Current Report on Form 8-K are being issued and sold by the Company to New Circle in reliance upon the exemptions from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act.

01 Regulation FD Disclosure

Item 7.01 Regulation FD Disclosure. On October 21, 2024, the Company issued a press release (the " Press Release ") announcing that the Company entered into the Purchase Agreement with New Circle. A copy of the Press Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The information provided in this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing. CAUTIONARY NOTE REGARDING FORWARD-LOOKING This Current Report on Form 8-K may contain forward-looking statements within the meaning of federal securities laws that are subject to certain risks, trends and uncertainties. As used below, "we," "us," and "our" refer to the Company. We use words such as "could," "would," "may," "might," "will," "expect," "likely," "believe," "continue," "anticipate," "estimate," "intend," "plan," "project" and other similar expressions to identify forward-looking that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Accordingly, any such statements are qualified in their entirety by reference to the information described under the caption "Risk Factors" and elsewhere in our most recent Annual Report on Form 10-K (the "Form 10-K") and subsequent periodic and or current reports filed with the Securities and Exchange Commission. The forward-looking statements contained in this Current Report on Form 8-K are based on assumptions that we have made in light of our industry experience and our perception

01 Financial Statement and Exhibits

Item 9.01 Financial Statement and Exhibits. (d) Exhibits. Exhibit No. Description 10.1 Share Purchase Agreement by and between Direct Digital Holdings, Inc. and New Circle Principal Investments LLC, dated October 18, 2024. 10.2 Registration Rights Agreement by and between Direct Digital Holdings, Inc. and New Circle Principal Investments LLC, dated October 18, 2024. 99.1 Press release dated October 21, 2024. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. October 21, 2024 (Date) Direct Digital Holdings, Inc. (Registrant) /s/ Diana P. Diaz Diana P. Diaz Chief Financial Officer

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